In many cases, you may not agree with the amount of tax shown on a Statement of Account, or demanded by HMRC. There could be a simple error – such as failure to credit a payment you have made – which can be sorted out by a phone call to the telephone number shown on your Statement of Account. You can look at ways to contact HMRC here.
If your income has fallen, then any payments on account (POA) included in your bill may be too high. You can ask to have them reduced. This can be done on-line, by phoning HMRC or by completing form SA303. You will need to make a realistic estimate of your tax bill for the year for which POA are due.
In other cases, part of your tax bill may be based on an estimate of your tax liability (a “determination”), because you have not sent in your tax return. If you act quickly it is usually possible to get it corrected, provided you follow the right procedures. You need to act within (broadly) four years of the end of the tax year, or HMRC will not process your return.
If you have not completed a tax return you will be liable for any penalties, interest and tax charged under a “determination”. These are treated as being correct and are enforceable until the completed tax return is submitted, and the tax bills are revised.
Once the tax return has been submitted, the amount of tax is revised and you will then be asked for this revised debt plus interest and any penalties which remain due in respect of the revised debt.
HMRC’s Debt Management is concerned not just with payment of outstanding taxes, but also with bringing your affairs completely up to date. If you have not sent in all your tax returns, Debt Management is likely to continue taking action against you, even if you pay all the tax demanded, as there are penalties for late submission of returns. It is therefore in your best interests to send in all your tax returns as soon as possible. At TaxAid, we frequently find that doing this reduces the size of the tax debt to more manageable proportions.
